23. The greatest opportunity to affect value in the purchasing process is when:

a. the supplier(s) is selected.
b. price and terms are determined.
c. potential suppliers are analyzed.
d. needs are recognized and described.
e. the buyer follows-up and expedites the order.

24. If the buyer does not have a clear and unambiguous description or specification and wants to find out which suppliers can deliver the best value when and where needed, he or she will typically issue a:

a. the ability to aggregate spend
b. the advantages from economies of scale.
c. visibility up- and downstream in the supply chain.
d. the ability to automate and facilitate transactions.
e. all of the above.

26. One purpose of a requisition is:

a. to give users a way to authorize buyers to acquire goods and services.
b. to solicit price quotes for goods or services from suppliers.
c. to give finance a way to have the final say in any decision to spend money.
d. to clarify the description of need before communicating with potential suppliers.
e. to request or requisition supplies from external suppliers.

a. the need for an audit trail.
b. the large volume of items and dollar value.
c. severe consequences of poor performance.
d. the potential contribution to organizational objectives.
e. all of the above.

29. Online auctions have been most effective when:

a. the good or service is unique or highly customized.
b. technological, logistical, and commercial specifications are ambiguous.
c. the market conditions favor buyers.
d. the organization owns the technology to run the auction.
e. there are a limited number of suppliers available.

29. Electronic data interchange (EDI) provides:

a. secure transmission of large amounts of data, but with slow turnaround.
b. secure transmission, greater accuracy and shorter process cycle time for all data.
c. slow processing of large amounts of data, but with greater accuracy.
d. longer process cycle time, but with greater accuracy.
e. secure and rapid transmission of small amounts of data.

30. Application software for the procurement process is available:

a. only through an enterprise resource planning (ERP) system.
b. only from a systems developer.
c. only from an application software provider (ASP).
d. from an ERP system or systems developer, but not from an ASP.
e. from an ERP system, a systems developer, or an ASP.

31. Effectively and efficiently applying technology to the supply management process will result in:

a. increased clerical effort because there is more data entry than in a manual system.
b. damaged buyer-supplier relationships because of the impersonal nature of electronic communication.
c. an ability to reduce the total cost of doing business by enabling just-in-time systems, bar-coding applications, integrated manufacturing, and electronic funds transfers.
d. poorer negotiation planning and preparation because of the time spent accessing and analyzing data.
e. a decline in operating performance because of the volume of information to be analyzed and considered before making a decision.

True and False

1. A process is a set of activities that has a beginning and an end, occurs in a specific sequence, and has inputs and outputs.

2. Poor internal compliance with supply processes may indicate that internal customers do not trust the supply process or the suppliers to live up to promises.

3. A maverick buyer is a talented member of the supply department whose creativity and innovations have saved the organization large sums of money.

4. A bill of material (BOM) includes a list of potential suppliers for each item needed to make one month’s scheduled production.

5. The terms and conditions included in a purchase order vary depending on the nature of the purchase and may relate to price, quality, and service.

6. An online catalog is a digitized version of a supplier’s catalog that cannot be customized to include the specific items, prices, and other terms and conditions negotiated by the buyer and seller.

7. A reverse auction is an online, real time, increasing price auction between multiple pre-qualified suppliers and a buying organization.

8. Before embarking on an e-commerce path, the supply leadership should decide what should be acquired through e-commerce and what tools should be used.
9. It is relatively difficult to develop a global database to consolidate volumes and sourcing strategy because common technical standards and government regulations do not exist across countries.

10. Information flows into the supply group from (1) other internal functions and (2) external sources; and information flows out from supply to (1) other internal functions and (2) suppliers.